Megan Fox, age 13, of Grand Forks, N.D., for her question:
HAVE OLD AGE PENSIONS BEEN AVAILABLE FOR A LONG TIME?
An old age pension is a fixed amount paid by a government or former employer. Old age pensions granted by a government to its employees first appeared in France in the early 19th Century and in Great Britain in 1834. They were instituted in newly unified Germany in 1873.
The establishment of pensions then spread to many other European countries in the first decade of the 20th Century.
In the United States, the railroads remained until 1913 the only important employer group to provide old age pensions for their employees. Today three principal sources of old age pensions exist in the United States. The most important is the Social Security system established by the Social Security Act of 1933. Under this law, employers and employees contribute to a government fund used to provide monthly allowances to employees past the age of 65. Reduced benefits are available starting at age 62 or for widows at the age of 60.
The second type of old age pension is one provided directly by many employers, sometimes with the assistance of employee contributions, to people who have been employed by them for specified minimum periods of time. It includes pensions provided by both private employers and government agencies.
The third type is found in the increasing tendency of trade unions to demand improved financial provision for retiring workers in their labor contracts. Collective bargain plans are often administered jointly by trustees selected by the employers and unions, implemented with funds contributed by the employers and administered by the unions or by a trustee.
It is often possible for retired employees to receive financial support from two or even more sources. Today almost all employees are covered by social Security.
Special provisions in the federal tax laws permit self employed persons to establish private pension plans, called Keogh accounts, for themselves and their employees, with tax advantages similar to those given to approved corporate pension plans.
Other provisions allow individuals who are employed and have ¬or are entitled to have company pension plans to also establish Individual Retirement Accounts with substantial tax advantages. These special retirement plans are called IRAs.
A frequent supplement to old age pensions is provided by the veterans, pensions issued to certain classes of war veterans.